Red tape revolution? Not at Barroso s bureaucracy factory

2 Oct 2005

Article by John Blundell in The Business

I feel I ought to applaud the announcement from José Manuel Barroso, the Portuguese President of the European Commission, that he is planning to scrap a raft of fatuous or redundant EU directives. It would be churlish to do otherwise. However, as we shall see, it would be a mistake to rejoice too much.

When taken at face value, the claims from Brussels sound like a reversal of the core assumptions upon which the European Commission operates. Previously it had taken as axiomatic that all regulations imposed across national boundaries create a conformity which enhances the liberalisation of trade. It is a fallacy but one that legitimises the thousands of Brussels jobs working out these rules and trying to make sure they are enforced, as well as the hundreds of thousands busy complying with them.

The commission has announced a list of 68 legislative proposals which it plans to withdraw or amend; however, 183 proposals were reviewed so 115 survived unscathed, which shows how limited the proposals really are. Barroso also promises to cull the 80,000-page law book of the European Union (EU) to a more modest 50,000; somehow I dont believe him.

It is nevertheless my belief that Barroso, our supreme bureaucrat, has undergone something of an intellectual conversion over the past few decades. As a young man he was  not surprisingly, given how conformist and conventional the young tend to be  a socialist. We learn he has mellowed and is now an advocate of plural democracy and open markets.

Portugal, his home, has blossomed since the fall of dictator António de Oliveira Salazar in 1968 and the subsequent relaxation of the fascist ideals of autarchy and state direction. For Portugal, accession to the European Union (EU) was an opening to the world. For Britain, however, it has been a closing.

The commissions declared plan to start reducing the 80,000 pages of petty rules that are its statute book has, comically, provoked members of the European Parliament to voice opposition to the moves. Josep Borrell, President of the European Parliament, has questioned whether the commission has the authority to withdraw legislation which has already gone before the parliament. Procedurally, he may have a point but it gives us a glimpse that the so-called European Parliament has minimal, perhaps zero, control of the commission. The British Parliament is mute and nods through every new directive too. Have we ever heard of the Commons trying to countermand a Brussels directive ? Westminster is merely a provincial assembly now.

Le Figaro, the French newspaper, reports that the exercise is largely cosmetic. It says the majority of the proposals are already obsolete; for example, 22 concern the association agreements signed with the 10 new EU member states, which became defunct when the countries joined last year. Some others have been adopted through other legislative channels, and further ones on the list will only have the most controversial aspects removed.

Our BBC was more gullible. It trumpeted the announcements as a real change of gear. It isnt. It is business as usual in the bureaucracy factory. What I think we may agree is that there has been a change in the intellectual climate. Who believes still that the commission can regulate us into prosperity with a subsidy here and a regulation there ? It may be un-sayable yet in some quarters but the reason the once poweful German, French and Italian economies are now stalling is the slow strangulation of their commerce by the constant drizzle of new rules, mostly from Brussels. We can only trade into prosperity with markets free, taxes low and regulations relaxed.

If this is all too abstract here is an example of a rule in dispute. The French ban all movements of lorries on Sundays. This is not out of religious devotion or sanctity. It is simply an agreeable restrictive practice much honoured by French hauliers and disliked by its neighbours. Will the commission blow away this cobweb ? No. It ducks any responsibility. It chooses silence.

Although the commissions proposals to reduce EU regulation are welcome as a sentiment this is not the bonfire of red tape suggested by the Department of Trade and Industry and Downing Streets overly enthusiastic press offices. What is at work is the need to attribute some success to the otherwise empty presidency of the EU by the UK. Brussels is simply not in the business of liberalising markets. Its business is uniformity and compliance.

The BBCs Newsnight reported that the commission has actually withdrawn fewer directives this year than the 108 proposals that were scrapped last year. The momentum of daft rules is still accelerating even if Senhor Barroso says he is lifting his foot from the pedal.

The British No campaign reacted perceptively in my view: The overwhelming majority of the directives withdrawn would not have affected UK business in any way. It is not red tape in a meaningful sense. Also, many of the directives are simply being withdrawn so they can be revised or amended. Instead of tackling regulations which damage competitiveness, the commission has focused on withdrawing regulations which have been pending for years and were hopelessly out of date or clearly had no political support. For example, 20 of them were over five years old. The EU repeals legislation every year. But this has not stopped its tendency to over-regulate: it invariably enacts more new pieces of red tape than it tears up. Figures released by the Foreign Office in March showed that since 1997 alone the EU has passed 4,806 more regulations, directives and decisions than have been repealed.

This weeks bogus news is therefore a mirage. The tide of erroneous thinking is still flowing into the British statute book. What we may be magnanimous about is the hint of a sinner repenting and the realisation that free trade just needs impediments removed.

All the great advocates of Free Trade from Adam Smith in the 18th century through to Milton Friedman, the Chicago economist and Nobel Prize winner, in the 20th, have never argued that the length of traders shoelaces, or domestic water quality, or the cleanliness of beaches have to be uniform to be free. The waffle of level playing fields is simply wrong-headed. Markets allow the divergent to swap goods without any imposed conformities.

The EU has got away with the pretext that although much of its efforts may be corrupt or wasteful at least it stops the French and Germans resuming their blood-spilling past. But who can be morally alert and think this is a real danger? The monstrous EU farm regime, the so-called Common Agricultural Policy, is one of the great tyrannies of the planet. It is evil. Its mercantilist core spreads poverty and misery beyond the Unions boundaries. The CAP remains the dominant and defining policy of the EU and the commission, when measured in terms of cash spent as a share of the overall budget. This weeks promise of reforms and relaxation said nothing of this juggernaut of fraud. If we judge Brussels by its deeds rather than its press releases, nothing changed last week.

John Blundell is director general of the Institute of Economic Affairs